India looking to float infrastructure ‘feeder fund’: Chidambaram

Desperately seeking foreign investment in India's gloomy infrastructure sector, finance minister P Chidambaram told an audience in London that the government is considering setting up a London-listed 'feeder fund' for Infrastructure Debt Funds (IDFs).

A feeder fund makes most of its investments through a 'master fund'; it can obtain better trading and operating costs through the master-feeder structure with economies of scale.

India is looking to work with the UK on increasing institutional investments in the sector, Chidambaram said after the 6th annual India-UK Economic and Financial Dialogue that ended in London on Thursday.

"Both countries agreed to pursue joint work on the common aim of exploring ways to encourage increased institutional investment in infrastructure," Chidambaram and Britain's Chancellor of the Exchequer George Osborne said in a joint statement.

"This will include exploring the possibility of establishment of a London listed 'feeder fund' for Indian Infrastructure Debt Funds (IDFs)," the statement said.

The statement said that India would actively consider the UK's offer of partnership over the Bengaluru-Mumbai Economic Corridor (BMEC), and co-financing of a feasibility study.

Besides infrastructure, Chidambaram's meeting with Osborne focused on a range of issues, including financial sector reforms, the importance of increasing foreign direct investment (FDI) in India's insurance sector, and support for small & medium enterprises (SMEs) with plans to "work together to promote trade and investment between the SME sectors of the two countries".

The ministers said, "We agreed on the importance of passing the Indian Insurance Amendment Bill in order to enhance the FDI limit in insurance companies from 26 per cent to 49 per cent and enable international reinsurers to establish in India."

The two leaders also discussed the importance of the "timely conclusion of an ambitious EU-India Free Trade Agreement".

Chidambaram left for Paris today on the next leg of his three-nation tour, which concludes, with talks in Qatar on Saturday.

The joint ministerial statement said India and the UK remain committed to ensuring that the international financial reforms agenda stays focused, proportionate and consistent across the global financial system.